Friday, August 23, 2013

The massive mult-trillion Fed/Government stimulus dumped into the housing market is starting to fade now - hard. In addition, the rapid move higher in interest in May triggered by Bernanke's flash of Tourette's syndrome when he blurted out his "taper" mistake is going to start showing up in the home sales numbers, starting with today's disastrous new home sales report for July.

I wrote an article for Seeking Alpha on the new home sales report this morning. You can read it here: New Home Sales Plunge. If you are an aggressive trader, it's open season for shorting the homebuilders every time they spike higher on bogus news reports. Have at it with no fear and I list my favorite short-sale ideas in the article.

In addition, I wrote an article after Wednesday's existing home sales report which explains why there is a "lag" effect between the interest rate spike in May and the way existing home sales are reported. You read about it here: Sell Today's (Wednesday's) Existing Home Sales Report. As I explain in the article, we'll start to see existing homes sales start to decline pretty rapidly starting with the September reporting of August's existing home sales.

Again, anecdotally, I'm actually starting to feel some horror over the number of "for sale" signs popping up all over the metropolitan Denver area. They're popping up like zits on an oily-skinned 13-yr old.

I have a feeling a lot of people are now being told that prices have gone up to the point where they can sell their home at a price that's above the value of the mortgage. Unfortunately, if you want to sell a home you don't list it in late August - you list it by the end of April. For all the talk in the media about low inventory, I can guarantee that inventory is not a problem now.

I especially love the "coming soon" signs on top of realtor signs. It's as if the sign is saying, "don't go look at the four other homes for sale on this block because 'I'm coming soon!'" This is just like a repeat of what was happening all around Denver in late 2007 and early 2008. The avalanche of "for sale" and "coming soon" signs preceded the housing crash and the great financial crisis.

Hate say it on a Friday but were back to where we were back then, only this time around it will be a lot worse...Just like 2008, as the housing market crashes, gold is getting ready to make an extended move back to all-time new highs. Have a great weekend.

24 comments:

My freinds and relatives scoffed when I told them this so called housing boom was faux. My freinds and relatives scoffed when I jumped up & down screeming to buy gold @ $1250. I don't want to be around these people when housing crashes and gold is @ $2500. Thanks Dave for keeping me sane, with your insight I knew my thinking was spot on.

Thanks. I'll do a gold/silver update early next week. We're going a lot higher. The elitists in London fucked up again by floating that 200 tonne gold lease proposal to India. It shows how desperate they are for gold that can be physically delivered. I hope India leases it because then the world will get to see just how quickly that kind of size trade will disappear down China's rabbit hole.

It looks like India said 'No' on providing 200 tons of gold to London. If that's the case, London is still screwed and can't deliver until they get it somewhere. Either way, London cannot win, right? Maybe this is why the U.S. wants badly to go into Syria, take it over and steal their gold? Obama, GS, JP Morgan and Pentagon are desparate.

As compared to 2008 and housing aren't things slightly different? Then it seems the FED was behind the curve in the sense rates were much higher and obviously no qe. Just wondering how it/if will play out differently this time.

You have a wonderful and insightful blog! Thank you so much for it!Just one question....could precious metals first decline severelyas the margin calls are made and there is a rush into the usd/treasurieslike 2008-9?

Hedge funds are already at a historically low net long position. Sure we might see everything spike lower briefly when the stock market starts to crash, but the metals will quickly get a flight to survival bid. Please review the intra-day action in May 2010 (i think it was May that year) when the stock market fell 1000 pts intraday.

Both Bush & Obama have kept negotiations secret about this nuclearized NAFTAThe Trans-Pacific Partnership is not about free trade. It's a corporate coup d'etat--against us!

Imagine the uproar if President Obama and Congress tried to pass a bill to outlaw such "preferential procurement" policies, summarily cancelling our democratic right to decide where to make public purchases. I'd get pretty PO'd, wouldn't you? And what if they also proposed that foreign corporations in Brunei, New Zealand, Vietnam, and other nations must be given the right to make the sale on any and all products purchased with our tax dollars? That'd set my hair on fire!

The American people would never stand for this brazen affront to our sovereignty, so I can assure you that Obama and Congress will definitely NOT be proposing any such thing. Not directly, that is.

Instead, their hope is to tiptoe it around us. The nullification of our people's right to direct expenditures of our own tax dollars is but one of the horror stories being quietly packed into a political-and-economic bombshell benignly labeled TPP --the Trans-Pacific Partnership.

This thing is a supersized and nuclearized NAFTA, the 1994 trade scam rammed through Congress by Bill Clinton, Wall Street's Robert Rubin, and the entire corporate establishment. They promised that the "glories of globalization" would shower prosperity across our land. They lied. Corporations got the gold. We got the shaft--thousands of factories closed, millions of middle-class jobs went south, and the economies of hundreds of towns and cities (including Detroit) were hollowed out. (Most Mexicans got the NAFTA shafta, too. US grain traders like ADM dumped corn into Mexico, wiping out millions of peasant farmers' livelihoods, and thousands of local businesses were crushed when Walmart invaded with its Chinese-made wares.)

This time we really must pay attention, because TPP is not just another trade deal. First, it is massive and open-ended. It would hitch us immediately to 11 Pacific Rim nations (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam), and its door would remain wide open to lure China, Indonesia, Russia, and other nations to come in. Second, note that many of those countries already have trade agreements with the US. Hence, THIS AMAZING FACT: TPP is a "trade deal" that mostly does not deal with trade. In fact, of the 29 chapters in this document, only five cover traditional trade matters!

The other two dozen chapters amount to a devilish "partnership" for corporate protectionism. They create sweeping new "rights" and escape hatches to protect multinational corporations from accountability to our governments... and to us. Here are a few of TPP's provisos that would make our daily lives riskier, poorer, and less free:

"The political class has reached some kind of critical mass in the 21st century. There is something going on in Washington that needed to be called out. I do not think it can be sustained, and I think it is indecent. It is not how Americans want their government and their capital city to be."

I strongly recommend that you watch this inside look at the culture of unwarranted privilege, unprincipled greed, and self-delusional narcissism amongst the ruling elite in Washington and New York.

But even the suggestion that the government should infiltrate groups that are not actively participating in criminal acts is troubling. In fact, it recalls the abuses uncovered by the Church Committee in the 1970s, when the FBI infiltrated such subversive groups as the feminist and civil rights movements. To his credit, Sunstein’s infiltration suggestion is different in nature:

By this we do not mean 1960s-style infiltration with a view to surveillance and collecting information, possibly for use in future prosecutions. Rather, we mean that government efforts might succeed in weakening or even breaking up the ideological and epistemological complexes that constitute these networks and groups.

But while it’s nice to assume that the government would limit that “cognitive infiltration” authority to false conspiracies, history suggests that it would be also used against activists trying to expose actual government misconduct.

New York’s attorney general sued Donald Trump for $40 million Saturday, saying the real estate mogul helped run a phony “Trump University” that promised to make students rich but instead steered them into expensive and mostly useless seminars, and even failed to deliver promised apprenticeships.

Attorney General Eric Schneiderman says many of the 5,000 students who paid up to $35,000 thought they would at least meet Trump but instead all they got was their picture taken in front of a life-size picture of “The Apprentice” TV star.

“Trump University engaged in deception at every stage of consumers’ advancement through costly programs and caused real financial harm,” Schneiderman said. “Trump University, with Donald Trump’s knowledge and participation, relied on Trump’s name recognition and celebrity status to take advantage of consumers who believed in the Trump brand.”

A spokeswoman for Trump did not immediately return a request for comment Saturday.

The lawsuit says many of the wannabe moguls were unable to land even one real estate deal and were left far worse off than before the lessons, facing thousands of dollars in debt for the seminar program once billed as a top quality university with Trump’s “hand-picked” instructors.

Schneiderman is suing the program, Trump as the university chairman, and the former president of the university in a case to be handled in state Supreme Court in Manhattan. He accuses them of engaging in persistent fraud, illegal and deceptive conduct and violating federal consumer protection law. The $40 million he seeks is mostly to pay restitution to consumers.“Unlike some who are willing to turn a blind eye to fraud in exchange for campaign contributions, the attorney general is willing to follow an investigation wherever it may lead, even if that means investigating people with whom he’s had a relationship, Schneiderman spokesman Andrew Friedman told The Associated Press.

If you live in Chicago and don’t know the name Amer Ahmad, start paying attention.

He was Rahm Emanuel’s comptroller. He resigned a month ago to “return to the private sector.” He was indicted last week by a federal grand jury in Ohio for bribery, fraud and money laundering while serving as Ohio’s deputy treasurer.

In the day’s since his resignation there has been a lot of finger pointing, ass covering and political intrigue.

Some independent alderman like Fioretti and Waguespack have wanted a more open, transparent investigation of what Ahmad did here. They want the city’s inspector general Joe Ferguson to be allowed to do his job.

That’s not what Rahm wants.

And you have to wonder why not?

When did Rahm know about the federal investigation of Ahmad in Ohio.

Does Rahm know that there is a federal investigation of Ahmad and Rahm for similar activities in Chicago?

Wouldn’t his old pal, AG Eric Holder tell him if there was.

Of course, he and Holder never got along that well anyway.

This is what hasn’t been mentioned much:

Amer Ahmad wasn’t just the city’s comptroller.

He sat on the most the city’s pension boards (not including the Chicago Teachers Pension System).

"I guess all those newly employed part-time workers with their decreasing avg weekly paycheck and skyrocketing health insurance premiums will be more than happy to start buying a home now....NOT"

Very good point, Dave. It takes people, making a living at a GOOD wage, to buy a home. Otherwise, they go shopping at the mall for $10 items. Investors can buy up all the US homes they want but they won't be able to dump them in enough time.

We begin with the 35 year sentence that Bradley Manning received and speak with Colonel Lawrence Wilkerson, Colin Powell’s former Chief of Staff who went public in 2005 with his knowledge that Vice President Dick Cheney provided the “guidance” that led to America’s torture disgrace. We discuss how much Manning hurt the United States compared to Cheney and why others convicted of spying for the Soviet Union, Cuba and Russia received much lesser sentences.

For example, the United States Department of Agriculture has called its $1.6 billion business and industry loan program a rousing success. Not surprisingly, the department often trumpets the number of jobs that are expected to result from these loans — figures that it gets from the borrowers themselves. Whether these jobs are actually created, however, is another story.

The loan guarantee program is overseen by the Rural Development unit of the Agriculture Department and is part of the American Recovery and Reinvestment Act of 2009. Rural Development provides loan guarantees of as much as 90 percent to banks or other approved lenders that finance the improvement or development of businesses in rural and high-unemployment areas.

How many jobs were added or saved through the loans is also a crucial measure of the program’s success or failure.

A current success story on the agency’s Web site is that of Carolina AAC, a company that received $10.4 million in late 2010 to build a concrete manufacturing plant in Bennettsville, S.C.

“This project will create approximately 197 new jobs in Marlboro County,” the Agriculture Department’s Web site says. Such a figure would make Carolina AAC the program’s third-largest borrower in terms of jobs created.

But Carolina AAC said in a January 2011 news release that only 36 jobs would be created at the project. And even that has not come to pass. Currently, 10 people work at the company, according to Charles Paterno, its managing member. Troubling for taxpayers is that the government backs 90 percent of the loans and they are in liquidation.

I live in the northern Highlands area here and all I see are all the "Coming Soon" signs. And from the looks of it, a good number of them are flips. Interest rates are creeping up, and if they keep going up, watch out.

Thanks for the color. I've been meaning to drive around the Highlands area to check it out. I was over there across from Sportique Scooters last weekend and saw a really nice scrape rebuild multi-story duplex with a "for sale" sign on one side and a "coming soon" sign on the other.

You should drive along 8th Avenue from Madison to Corona or along Downing on the west side of Wash Park or all around the west side of Wash Park. It's becoming an avalanche of "for sale" and "coming soon" signs.

Eric Arthur Blair aka George Orwell

"Hope" is not a valid investment strategy

Full Time Jobs Over Last 5 Years

Is Your Gold Missing?

Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Epic Quote - "Jesse" Sent This To Me

"The world will soon wake up to the reality that everyone is broke and can collect nothing from the bankrupt, who are owed unlimited amounts by the insolvent, who are attempting to make late payments on a bank holiday in the wrong country, with an unacceptable currency, against defaulted collateral, of which nobody is sure who holds title." - Anonymous

The Basic Fundamental Problem

What's the solution?

“THERE IS NO MEANS OF AVOIDING THE FINAL COLLAPSE OF A BOOM BROUGHT ABOUT BY CREDIT EXPANSION. THE ALTERNATIVE IS ONLY WHETHER THE CRISIS SHOULD COME SOONER AS THE RESULT OF A VOLUNTARY ABANDONMENT OF FURTHER CREDIT EXPANSION OR LATER AS A FINAL AND TOTAL CATASTROPHE OF THE CURRENCY SYSTEM INVOLVED.”

Ludwig von Mises – Austrian Economist (1881- 1973)

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie? JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

Priceless Quote From Richard Russell

On Larry Summers: This doofus practically ruined Harvard when he headed it. I can't think of a worse choice to be chief economic advisor. I wouldn't trust Summers to manage a Starbucks franchise.

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.

Quote of the Month

And very relevant in the context of yesterday's post about gold moving higher against all fiat currencies:

Just imagine what would happen if a mere ten percent of the money currently going into bonds were instead to go into gold. As in 1972, the real move has yet to begin.

- Murray Pollit, Pollit & Co.

A Picture Says It All...

www.moneyandmarkets.com

Golden ore samples produced by Eurasian Minerals

Undisclosed exploration site

The Next Reserve Currency?

1 oz. Chinese Panda

Guess who said this?

Rising prices of precious metals and other commodities are an indication of a very early stage of an endeavor to move away from paper currencies...What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment.

-Alan Greenspan, 9 Sep 2009

THIS is what REAL money looks like

1 oz. Gold Eagles

Alan Greenspan said what?

“Deficit spending is simply a scheme for the ‘hidden’ confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights.”

From "Gold and Economic Freedom" a 1966 Essay by Alan Greenspan

About Me

I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for a large bank. I have an MBA from the University of Chicago, with a concentration in accounting and finance.
Currently I co-manage a precious metals and mining stock investment fund in Denver.
My goal is to help people understand and analyze what is really going on in our financial system and economy.